Automakers set to receive $25B in low-cost government loans
The U.S. Senate approved a stop-gap spending measure that funds the government through March and includes up to $25 billion in low-cost government loans for automakers to retool plants to build fuel efficient vehicles.
The Senate’s 78-12 vote sends the bill to President Bush, who is expected to sign it before the government’s current budget expires Tuesday.
The president’s signature will mark the culmination of nearly two years of efforts to win additional financial support for automakers who face tens of billions of dollars in costs to increase the efficiency of their vehicles by at least 40 percent by 2020.
Automakers will get up to 25 years to repay the loans. Because they have sub-investment grade credit, they would save more than $100 million per $1 billion borrowed in lending costs. They could also ask the Energy Department to defer repayment for up to five years.
Senate approves auto industry loans - detnews.com
September 28th, 2008 at 6:55 pm
This is HUGE for the big 3.
$7.5 billion will really help them out!
September 28th, 2008 at 8:02 pm
I will be truely amazed if chrysler can pull out of this economic disaster.I mean really,does chrysler have enough product/money to pull this one out.
What do you guys think about the loan.Will it help the big 3 out greatly?
Or do you guys think cerberus will keep cutting tilll all chrysler employees are making $9.50 an hour.
Horrible times out there for everyone. And what about all these jobless claims.Where is the job crestion at for all these unemployed people?There isnt any.
If we dont have job creation, then we are going to keep going down until all hell breaks loose.
September 28th, 2008 at 8:02 pm
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4tKxbx1zGu0&refer=home
This may help you understand the environment which gives rise to the tenor and tone of Rich’s postings here. Anybody want to buy a car dealership? Plenty of them are being advertised for sale. Lots of sellers and damned few buyers.
September 28th, 2008 at 8:03 pm
Derrik, that will be about $7.5 billion per company.
September 28th, 2008 at 8:14 pm
http://www.freep.com/apps/pbcs.dll/article?AID=/20080928/BUSINESS01/809280366/1002/BUSINESS
“$25 billion loan just the first step for rebuilding carmakers -
Law also will require models to get 25% better fuel
economy in order to qualify”
Headline in the Detroit Free Press, Sun. 9/28/0
This Detroit Free Press fleshes-out the Detroit News article posted by
Side Admin.
September 28th, 2008 at 8:23 pm
http://www.iht.com/articles/ap/2008/09/26/business/NA-US-Auto-Sales-Outlook.php?page=2?pass=true
“Tougher credit market compounds auto industry woes”
International Herald Tribune
Bob Nardelli is quoted in the 4th and 5th paragraphs, and Jim Press is quoted in the 7th paragraph.
September 28th, 2008 at 9:14 pm
I am getting ready to put in for a $100,000 bailout of my home mortgage, car loan, and two unsecured personal loans.
How much do you think the government will give me?
That’s right! Nothing. Precisely what the big three and every other vulture out there should get.
Why should hard earned tax dollars go to bail out these big fat cats?
Let’s hear three cheers for the fair tax!
September 28th, 2008 at 9:55 pm
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-statefairtrucks_26bus.ART.State.Edition1.274729b.html
“Dodge, Ford stay firm behind trucks”
Dallas Morning News
Mopar Dealer, Rich,
Share your thoughts with us about the quoted remarks of the co-chairman of the Chrysler Dealers Council, Hayden Elder. Are his experiences in that Athens, Texas C-J-D store representative of what you guys are seeing? Several weeks ago both of you told us that the leaderhip of the Dealers Council was handpicked by the company, not elected by the dealer body, and echoed the company line.
September 29th, 2008 at 2:53 am
Why the bailout is necessary the money to be lost won’t come out their pockets, they lose nothing its all ways the worker who pays. Ether now from our taxes or later with lost of lively hood.
September 29th, 2008 at 7:29 am
DaveS
Mr. Elders store is located in a part of the country that has benefitted from the surge of oil prices, not unlike what happened in the 70’s in that part of the country.
The spike in new truck sales were due in part to the huge factory incentives: In California they are offering 2008 2 wheel drive Ram 1500 Quad Cabs SLT’s for as little as $16,988 and ST’s for as liitle as $12,988.
When the supply of 2008 Rams dry up or when the incentives go away truck sales will suffer.
Also they quote August sales numbers, September is going to be the worst month in over 20 years.
25 Billion dollar loans to the same idiots that pay themselves Million dollar bonuses for losing Billions of dollars, what more do you need to know?
September 29th, 2008 at 1:42 pm
Rich,
Thanks for your informative and candid response. It cuts to the thrust of the issue. All the regulars here expect no less from you. You are right about Athens, Texas being located in the East Texas oil patch, which is enjoying a robust economy and unemployment well below the national average..On the subject of incentives on Ram, Automotive News reports that the new ‘09 Ram will go on sale with $1,000 in incentives. Nobody can blame the company, but it sure as hell is a sad commentary on the state of the truck market and the condition of the economy that an all new truck can’t go out the door on the day of introduction without a thousand bucks on the hood.. I recall a different era my local Chrysler Plymouth dealer was asking –and getting—for $2,500 over MSRP for Chryslers TC by Maserati. Were you around then, Rich? Ah, those were the days. It was built on a chopped Cordoba platform that was shipped to Italy for assembly, was plagued by all kinds of quality problems that delayed introduction for a long time, and eventually even the market segment for which it was intended (people with more money than brains) caught on to the fact that it was not one of Lido’s better executed ideas.
September 29th, 2008 at 3:25 pm
does BIG 3 really desrve it ?
after all the money will be used to give bigger bonuses to big bosses who already are making millions when BIG 3 are loosing Billions. In either case they are outsourcing every thing to india / china , dont give a shit abt their employees .
September 29th, 2008 at 6:34 pm
DaveS Says
The Chrysler TC by Maserati was based of the Lebaron platform .
Roy L Fuchs
Chysler Dealer since 1971
September 29th, 2008 at 7:59 pm
Fat cat salaries, big bonuses, and stock options. Big business does not deserve a bailout. Not one dime of our hard earned taxpayer money.
If they can’t make it as an efficient companies, then they should fail. No one came to our rescue as a small business a number of years ago. No one is bailing out the working man today trying to get to work on $3.50 gasoline, with higher food costs, and soon to be higher engery costs this winter.
Greed is the root of all evil!
No sir, the big three does not deserve one dime of public money.
September 29th, 2008 at 8:52 pm
http://www.allpar.com/model/tc.html
roy i fuchs,
Here’s the Allpar article on the Chrysler TC by Maserati. It will clear things up for anyone who has any doubts about the LeBaron origin of the TC.
September 29th, 2008 at 9:31 pm
Pretty soon it will be almost impossible for anyone to get approved for an auto loan…..
Good luck automakers!
September 29th, 2008 at 9:39 pm
Archie can’t agree with you more, but be careful what you wish fore.
Now is the time for cooler heads, if you play your cards right you come out on top.
Thin to win, I believe that is Chryslers game plan thin to win!
Jim Press has said it over and over “We want to be the best small car company in the world, not the largest”.
I don’t even like Jim Press, but I like the idea of being a small profitable company verses a bloated money loser and don’t get me wrong Chrysler is losing money.
The 25 Billion dollar low interest loan, that’s right Archie loan, along with an IPO might be just enough to carry them to profitable times.
I been writing on this blog for all most 2 years, taken my lumps, But a lot of what I have predicted has come true.
With in five years we could so all new players companies that have nothing to do with with the automobile industry, like maybe General Electric.
If I’d said that General Electric would become a force in the automobile business 2 years ago I’d been torched, but don’t be surprised who the next players will be. Google-Microsoft-Apple?
September 29th, 2008 at 9:48 pm
Dell if you have good credit, not buried in a trade and have the income to support a payment no problem with automobile financing.
I’ve had plenty of traffic of late, but it is 400-500 credit score, buried in their trade, no down payment roaches.
The credit worthy consumer is glued to the TV, the funny thing is the dinamics have changed with my credit worthy customers.
For the longest period of time if the wife was for the deal the husband followed and if she wasn’t for the deal I was wasting my breath.
But in the last couple of weeks the wife has green lighted the deal and the husband has put the brakes on, it is very frustrating when you have to reset your game plan.
September 29th, 2008 at 10:52 pm
Lets just hope all things get better!
September 30th, 2008 at 7:56 am
http://www.allpar.com/model/tc.html
Roy I. Fuhs,
Alpar’s article on Chrysler’s TC by Maserati (not the apostrophe and the possessive)will make a believer out of anyone who is skeptical about the Cordoba origins of that car..Can’t tell from your post if you are in that category, or not.
September 30th, 2008 at 9:58 am
http://www.allpar.com/news/index.php/2008/09/jeep-compass-overland-concept-for-europe/
Speaking of Allpar, has everyone seen their new article on the upscale Overland edition of the Compass? Apparently, one of the reasons that Compass soldiers-on is because it does have some sales traction in Europe. Remember, all we usually see is North American states data. You gotta go to Automotive News for foreign sales.
September 30th, 2008 at 11:02 am
The automakers deserve this a lot more than the big banks. The only reason everyone is behind the banks is that the banks are tied to our economy. Well the automakers are tied to our prosperity. GM and Chrysler both intend to have an electric vehicle to market in 2 years. That’s a big deal and hopefully they pave the way for things to come.
September 30th, 2008 at 11:43 am
I’m generally not in favor of corporate bailouts, but the fact is that the competition is uneaven right now. The foreign makers do not have unionized labor, their governments pay their workers health care, and their R&D is subsidized(the Prius was taxpayer funded in Japan). Its not a level playing field, and it makes it *very* difficult for a US automaker to put a car out thats competitively priced for equal quality.
Either we need to tariff the hell out of the imports to make up for the difference, or we need to subsidize our own so they can compete. Personally I’d rather enact tarrifs, but maybe thats just my protectionist streak.
September 30th, 2008 at 4:53 pm
“WOW” Brace yourselves for some ugly sales numbers for September.
September of 2007 Chrysler reported selling a total of 159,799 this number reflects both retail and fleet sales.
August of 2008 Chrysler reported selling a total of 110,235 this number reflects both retail and fleet sales.
As of now September retail sales are lagging August by about 12,000 units, Chrysler might not reach 100,000 total units for September 2008.
September 30th, 2008 at 6:43 pm
Reflex,
Everyone knows where you are coming from, but facts are facts. The REAL competition to the Detroit 3 no longer comes from vehicles imported from abroad, but from those manufactured in the USA by Asians and Europeans who were invited to invest their capital here. Honda Accords and Civics are assembled in Marysville, Ohio, Camry has long been made in Georgetown, Kentucky, Mitsubishi is now the sole owner of that Bloomington-Normal, Illinois plant that it once co-owned with the former old Chrysler Corp., and Huyndai has a plant in Mississippi, Nissan is building one there, and don’t overlook the Mercedes vehicles assembled in Alabama. Those foreign-owned plants ,were provided “incentives” to locate in this country by state and local governments, hire American labor ( though non-UAW except in three or four of them that come to mind, including the Toyota -GM plant in Fresno, CA, the Mitsubishi plant in Illinois, the Maza/Ford plant in Michigan, and maybe one or two others) and they pay taxes here. The trouble with protectionism is that it ignores the real world—like Toluca, Mexico being the source of PT Cruiser and Dodge Journay’, the LX cars assembled in Brampton, Ontario, Canada, and imported into the USA; minivans assembled in in Windsor, Ontario, and the list goes on and on. Globalization is not going to go away. The answer to Chrysler’s problems is to build products that American customers find as appealing as they do those Honda and Toyota vehicles assembled in the USA.
September 30th, 2008 at 8:50 pm
Whats new, rich?
Horrible times right now and chrysler doesnt have many vehicles people want.
September 30th, 2008 at 8:59 pm
Ill be happy with 100,000 units.
September 30th, 2008 at 10:46 pm
Chrysler needs vehicles like the 2009 mazda 6. What a sporty little car with great mpg. Looks great and gets good fuel mileage.
The chrysler group has nothing in that segment.Now wonder they cant sell cars.
September 30th, 2008 at 10:52 pm
And why is there ever so pricey, Dodge Dakota still all plastic?
Who in their right mind would pay $30,000 for an plastic interior.
Same thing goes for the cheap interior Caliber.
If chrysler sells over 90,000 units ill be very surprised!
October 1st, 2008 at 1:09 am
DaveS: By focusing on simply the manufacturing you make the same mistake that Consumer Reports and other such magazines make when ranking vehicles by how ‘American made’ they are. Where are most of the engineers for these companies? Where are most of the executives? How about the support teams? The supply chain? Where do the corporate profits go? Where is the R&D done?
Hint: Not in the US. At least not for the majority. Development and support of a vehicle costs far more than the end of the line manufacturing. Those are the crap jobs. It dosen’t matter if your typical Asian import was manufactured here, the vehicle was researched, designed and supported out of Japan. And all of those jobs were subsidized by their government, in health care, in lower standards of worker protection(Toyota engineers have been known to work themselves literally to death), in sub-standard environmental laws and with the R&D directly paid for by their governments.
Its not possible to compete with that domestically. Even if they put the end of the line manufacturing here.
October 1st, 2008 at 7:45 am
71,838 retailed in September thats about 11,000 units less then what was retailed in August.
I don’t know how much fleet business they did in September, but if I use August Fleet numbers then Chrysler will report right at a total of 100,000 sold units for the month of September.
Hell thats only 60,000 fewer sold units then they did in September of 2007.
October 1st, 2008 at 9:08 am
Dell, EVERY CAR available has a plastic interior.
It is a truck… the update for 2008 was an improvement.
October 1st, 2008 at 9:21 am
DETROIT - Ford said Wednesday its September U.S. auto sales were worse than expected, dropping 34 percent.
It was the company’s worst sales month of 2008.
October 1st, 2008 at 10:28 am
Ford sold 116,734 units in September.
Chrysler sales are really going to be bad!
October 1st, 2008 at 10:35 am
I believe chrysler will have a decline of over 43%. If ford sold 116,000 and chrysler sales are usually 30,000 to 40,000 lower than ford, then that tells you right there chrysler will have its worst month in history.
October 1st, 2008 at 1:21 pm
107,349 a -33% drop over September of 2007.
Chrysler Fleet sales jumped by 8,000 units over August, if the fleet sales had stayed the same then the numbers would have been much worse.
October 1st, 2008 at 2:53 pm
Dell,
Chrysler does not need a Mazda6,unless the new 09 restyled model can outsell the Sebring..The 08 model sold around 3k a month if a Chrysler sells 3k a month its a dud,Hell even the Sebring outsells the Mazda 6 !!!How can you say they need a Mazda6?Unless the 09 sells 20k a month,but unlikely..and it only gets 20 miles per gallon combined with the v-6, 23 with the 4 banger,Say an SRT -8 Challenger can get 20 mpg !!!as well a bigger,heavier 300/Charger can get 27 miles per gallon combined pretty much the same with either the 3.5 or the Hemi…Also the 3.5 v-6 300/Charger will beat the 08 mazda 6 by a fender through the 1/4,though it may be reversed for the 09 model for the 6 shooter cars but you get the drift.. ..Yes Chryslers are underated and unfairly bashed.By the way the 300/Charger has a 2.82 differntial gear ratio meaning slower excelleration compared to the Mazda’s 4.39 gear meaning faster excelleration..and yet the 6 banger lx will beat it..and the heavier lx 6 banger will fender it in a drag race and get average of 27 mpg doing so.(same as a Hemi mpg as well).Yes ,I believe we all want Chrysler to have a great 30k monthly sales car,but dont say they need a Mazda 6..thats the last thing they need….3k a month ..Yikes…Again,Yes they need a sweet looking restyled Sebring as we all know..
Even the beloved Toyota sales were down 29.5%,Honda down 20.9%,Nissan down 34%…I just hope Chrysler builds a sweet new Sebring to get the sales up,as it seems people dont really want tiny little cars,mid size is where the money is…
DaveS,Yes you corrected yourself on the T.C ,Cordoba platform fiasco ,Yes it was built on a LeBaron.And sorry I have been too busy to reply lately,but I just wanted to say Hi.
October 1st, 2008 at 3:26 pm
With $7.5 billion in hand, is it true that the Imperial Concept is back on track for its scheduled 2010 launch? Let’s all hope so! Without a high end flagship brand similar to the Lexus, Chrysler is forever doomed to a “me too” brand.
October 1st, 2008 at 4:20 pm
I’ve tried and give these guys some space, but the straw that broke the camels back fell today.
We’ve been led to believe that Chrysler had enough liquidity to make through 2009. They lied!
They ended VPA at the first of the year never to return. They Lied!
We’re going to raise the price of our last 127,000 2008’s so that we don’t have to raise our prices on the 2009’s the rest of the year. They Lied!
Same old story-Same old game plan-Same old screwing the dealers!
October 1st, 2008 at 5:10 pm
Now that they are back in the money, the suits will spend their bailout “mad money” paying off Diamler-Mercedes Benz for the rest of what is left of the company. Once again, the little man takes it in the shorts. Too bad the hard earned American tax dollars will wind up in the hands of the Germans. The bailout is a rip off.
October 1st, 2008 at 5:23 pm
I’m so tick off with the new Chrysler. When my lease is up I think I will be heading to honda! Screw the big 3.
October 1st, 2008 at 5:52 pm
http://online.wsj.com/article/SB122286679412694031.html?mod=fox_australian
This Wall Street Journal article says it all about September sales. It’s the economy stupid!
Look especially at the 3rd paragraph, and it’s last sentence, the one that says: “”Those declines…are a reflection of the dept of the recession…”
Total industry sales were down 27% over Sept. 2007, and Chrysler was below that by 6%, with a 33% decline. But evn mighty Totyota was down 32%, Honda down by 24%, Nissan by 37%, Ford by 34% and GM 16%.
Credit is not tight, it’s non-existent. The economy is lousy, people are hurting. But it’s always darkest before the dawn, and we shall rise to fight again.
October 1st, 2008 at 11:34 pm
DaveS
You are wrong their is plenty of lenders looking to finance vehicles, the problem is the people who do qualify have been brain washed into believing that they won’t qualify for a loan.
I had my local Credit Union Rep in today and he was begging for car deals, he told me that the Credit Unions are so flush with new deposites that they’re going to lower the the percent they pay on CD’s.
Quit watching the 24hr news cycle and go out buy something.
October 2nd, 2008 at 2:19 am
Rich - I would if I could get the diesel version of the GC for a few grand over the gas version. I can get into a gas version of the GC for $25k right now, but I can’t get into a diesel one for less than $36k. I’m pretty certain a diesel engine don’t cost that much. I’d love to upgrade from my Libby, but I can’t justify a $36k vehicle.
October 2nd, 2008 at 8:46 am
Cordoba was rwd. Tc is fwd . allpar is not the best chrysler information website .enough said.
October 12th, 2008 at 8:41 pm
I loved the Cordoba with its rich Corenthian Leather seats, long front end, and sleek interior appointments. It was the best selling Chrysler - ever.
October 27th, 2008 at 5:51 pm
Dan, I love the Cordoba too. By far, it was the best Chrysler product ever produced. Ever produced! My buddy has one, and he still drives it from time-to-time. He’s a real perfectionist and has kept his machine in tip top shape. If Chrysler would have been producing products like that all along, they would not be in the shape it is in now.